Why Housing Weakness Is Reaching Wealthier Buyers | Ivy Zelman

Key Takeaways

• Zelman says weakness in her firm's housing surveys has spread from entry-level buyers to previously healthier, higher-priced segments.
• Mortgage incentives can reduce a buyer's borrowing costs while putting pressure on the builder's margin.
• She sees land prices and development costs as part of the affordability problem.
• Her demographic outlook is a longer-term argument, rather than proof that every local housing market has enough supply.
• In a separate discussion, Reik questions how much further the Federal Reserve will tighten.
• The Fed held rates on October 28, 2026. That decision does not guarantee lower long-term mortgage rates.

Key Moments

00:01:09 - Weakness reaches buyers at higher price points

00:02:34 - Mortgage incentives and the pressure on builders

00:03:51 - Completed homes, cancellations and existing orders

00:06:58 - Land costs and builders’ construction plans

00:09:21 - How private equity finances land banking

00:12:00 - Young adults living at home and household formation

00:20:59 - Why Zelman distinguishes this slowdown from 2008

00:22:30 - Robotics and construction technology

00:24:40 - Older buyers and the effects of wealth transfers

00:27:12 - Trey Reik joins to discuss housing and interest rates

A home can remain expensive even when the housing market is weakening. Buyers struggle with the monthly payment, builders offer more help to get a sale across the line, and neither side feels much relief. The asking price alone doesn't show all of that pressure.

Ivy Zelman says that pressure is reaching buyers who had previously been holding up better. In her conversation with Maggie Lake, the co-founder and executive vice president of Zelman, a Walker & Dunlop Company, describes weaker conditions among luxury, move-up and active-adult customers, alongside an already difficult entry-level market. It is a reading from her firm's surveys and industry conversations, rather than a claim that every local market is moving together. ^1 2

Maggie Lake speaks with Ivy Zelman about housing demand, affordability, builder incentives and land economics. Trey Reik joins in a separate segment to discuss the Fed, interest rates and gold.

Mortgage rates help explain the strain. Freddie Mac's weekly average for a 30-year fixed-rate mortgage was 7.24% on October 29, 2026, down from 7.40% on October 15. That was some easing, but it still left borrowing costs above 7%. A fall from a recent high can soften the pressure without making the monthly payment affordable for everyone. ³

How mortgage incentives squeeze builder margins

Zelman describes mortgage-rate buydowns as one way builders have helped buyers manage the payment. The builder contributes money toward the financing, making a home easier to buy without necessarily cutting its advertised price. For the builder, that contribution is still a cost. Zelman argues that rising rates make it harder to offer enough help while protecting the margin on the home. ¹

The arrangement matters. Paying discount points exchanges an upfront cost for a lower interest rate, as the Consumer Financial Protection Bureau (CFPB) explains. A temporary buydown reduces payments for an initial period, after which they rise. Those are different forms of assistance, so a low advertised initial payment does not describe the full cost of every mortgage. ⁴

The timing of a sale matters, too. Zelman says completed homes can close more quickly, giving buyers less time to cancel or seek a better deal than a home still moving through construction. That can help a builder manage its existing orders. It doesn't remove the underlying problem of finding customers who can afford the payment. ¹

Why the pressure reaches landowners

When incentives become harder to fund, the pressure can move back through the building process. Zelman sees land as an important part of that adjustment. She describes builders renegotiating terms or walking away from some land-option deposits as demand weakens. Her concern is that prices paid for lots have not adjusted enough to the economics of selling the finished home. ¹

This is also a financing story. In the land-banking arrangements she describes, outside investors supply capital for land that builders prefer not to keep on their own balance sheets. A slowdown therefore reaches beyond the company putting up the house. It can affect the investors financing the land and the developers paying to prepare it. ¹

National new-home inventory provides some context for the selling environment. The Census Bureau estimated 476,000 new single-family homes for sale at the end of September 2026, equivalent to 8.4 months of supply at that month's sales pace. The estimate includes homes at different stages of construction. It describes the new-home market, not the supply of all US housing or the conditions in every neighborhood. ⁵

Does slower population growth mean less housing is needed

Zelman's longer-term argument goes beyond interest rates. She expects slower household formation to reduce the need for additional housing and challenges the idea that the country has a uniform housing shortage. Young adults remaining with parents, delayed family formation and a greater willingness to rent all feature in her explanation. ¹

There is a demographic basis for expecting slower growth, but it needs careful interpretation. In its January 2026 outlook, the Congressional Budget Office (CBO) projected annual deaths would exceed births starting in 2030. It nevertheless projected continued total population growth for years afterward because of net immigration. More deaths than births does not, by itself, mean the total population immediately shrinks. ⁶

Nor does a national population projection settle how many homes are needed in a particular place. The number of households also changes when people leave shared accommodation, and demand can shift between owning and renting. Zelman's demographic view helps explain her cautious outlook; it does not establish that an affordable home is available wherever someone needs one.

Why a difficult housing market need not repeat 2008

Zelman distinguishes her outlook from another global financial crisis. She points to mortgage underwriting and the way public builders have managed land and leverage. That is her assessment of resilience, rather than a claim that housing businesses face no losses. ¹

The regulatory distinction is narrower than saying every mortgage must be a Qualified Mortgage. The CFPB explains that the ability-to-repay rule generally requires most lenders to make a reasonable, good-faith assessment that a borrower can repay. Making a Qualified Mortgage is one way to comply. Those underwriting requirements do not prevent property prices from falling or a builder's profits from weakening. ⁷

Where Trey Reik's rate outlook differs

In a separate segment, Trey Reik, chief economist at Gold Bullion International (GBI), questions how much further the Fed will tighten. His argument centers on government financing costs, debt and Treasury-market liquidity. Zelman, meanwhile, says her firm's housing models use market-based rate assumptions rather than a personal prediction of falling rates. The two discussions therefore approach the housing outlook from different starting points. ^1 8

The Fed subsequently held its target range at 3.75% to 4% on October 28, 2026. Its statement said inflation remained elevated, and two members preferred a quarter-point increase. The hold is a documented decision; Reik's explanation of the fiscal pressures behind policy remains his interpretation. ⁹

The federal funds target concerns an overnight interest rate. It is not the rate on a 30-year mortgage, so a Fed pause alone does not promise cheaper long-term home financing. That leaves room for housing to remain under pressure even if policymakers stop short of the tightening some investors expected. ⁹

Zelman's warning about wealthier buyers matters because it suggests the pressure in her surveys is spreading beyond the households with the least financial room. The path from that warning to a broader recovery runs through payments, incentives, land costs and household demand. Housing can stay expensive for buyers while becoming less profitable for the businesses and investors supplying it.

Frequently Asked Questions

Is housing weakness reaching luxury buyers?

Zelman says her firm's surveys and industry conversations show weaker conditions among luxury, move-up and active-adult buyers. That is her assessment of those segments, rather than proof that every luxury market is declining. ¹

What is a mortgage-rate buydown?

It is financing assistance intended to reduce the borrower's rate or initial payments. Discount points can lower the interest rate in exchange for an upfront cost. Temporary buydowns reduce payments for a limited period. The terms determine how long the benefit lasts. ⁴

Does slower population growth prove there is no housing shortage?

No. CBO's January 2026 projections show slower growth and deaths exceeding births from 2030, while net immigration continues to support total population growth. Local demand and the formation of separate households also matter. ⁶

How much new-home supply was available?

The Census Bureau estimated 476,000 new single-family homes for sale at the end of September 2026, equal to 8.4 months at that month's sales pace. The figures include different construction stages and do not measure all existing housing. ⁵

Does a Fed pause guarantee lower mortgage rates?

No. The Fed's overnight policy target and the rate on a long-term mortgage are different. On October 28, 2026, the Fed held its target range while continuing to describe inflation as elevated. ⁹

Full Cleaned Transcript

Ivy Zelman: We really have seen another leg down since rates spiked. We believe we're not in a housing shortage, and we will start to see a lot less need for housing supply. I feel like the housing industry is the redheaded stepchild and has been left for dead.

Housing weakness reaches higher price points

Maggie Lake: Here with us to discuss the outlook for housing is Ivy Zelman, co-founder of Zelman, a Walker & Dunlop Company. Ivy, great to have you back.

Ivy Zelman: Thanks for having me, Maggie.

Maggie Lake: What are we looking at when it comes to housing? I'm hearing concerns. We've been seeing some weak data come through, although a little mixed. What are you seeing generally in terms of the shape the housing market is in?

Ivy Zelman: Unfortunately, we really have seen another leg down since rates spiked.

Our September survey for the homebuilders was probably among, if not the weakest, from a rate-of-change perspective on key performance indicators. It was pretty disappointing and upsetting, I'm sure, for industry participants now five years into a flat market.

We're definitely seeing things come down, and we've seen that continue into October.

Maggie Lake: Is this broad-based across markets, or do we have a bifurcated or multipolar market that reflects what's happening in the economy?

Ivy Zelman: The price points all felt a step down. Luxury, second-time move-up and active-adult markets weren't great by any means, but they were healthy.

Consumer confidence related to geopolitical events has continued to come under pressure. In September and early October, those markets were also feeling it.

It had been a tale of two price points. Entry-level was definitely weak and felt like we were in a recession compared with upper-end luxury. Now that has weakened, too.

Mortgage rates and builder incentives

Maggie Lake: That's concerning. It's a trend worth paying attention to because the more affluent consumer has been holding up the overall economy. If we're seeing that weaken in housing, one has to wonder what's happening elsewhere.

What's the biggest drag? You mentioned geopolitics and a general sense of concern. Is it rates? Is that the biggest drag right now?

Ivy Zelman: Yes. The spike to over 7% is a shock factor for people. It makes it harder for entry-level buyers to qualify.

Public homebuilders, which account for 53% of new-home sales, have been able to create affordability for entry-level buyers using mortgage-rate buydowns. Roughly 80% of all new homes sold are using a buydown.

But buydowns are expensive. If you want to buy a rate down 250 basis points, that's going to have nearly a 900-basis-point negative impact on gross margin.

When they were doing it at [rate unclear; captions read "499"], let's say the highest builder was offering incentives of 12% of the average selling price. They were getting people in at [the same unclear rate] and getting pretty healthy absorption.

But to buy down to that rate is just too expensive where rates are today. Most can't do it. Part of the challenge is getting people qualified at what's now called a 5.5% buydown rate. It's definitely had an impact.

Maggie Lake: That's interesting on a couple of fronts. That window is closing. It puts it out of reach for so many more people.

Ivy Zelman: Correct. They've already been struggling. They've been selling specs, which are homes built without a buyer.

The good news is that specs close so quickly that cancellation rates have gone up, but not as much as in 2022. When rates first spiked in 2022, we saw cancellation rates up 40%, 50%.

The ability to get specs closed faster mitigates the likelihood of that spike happening again. Builders that build to order and take the customer through the construction cycle are at risk of people canceling or wanting a better deal.

You have to be strategic about how you do that. People are trying to protect their backlog and mitigate buyers' fears. There's a lot of trepidation out there.

Maggie Lake: Does the impact differ demographically or regionally? Or is this broad-based pain now that we're above 7%, without much discrimination about where it's having an impact?

Ivy Zelman: It's more broad-based. It really isn't discriminating, although rates of change differ.

The Sun Belt, Southwest and Southeast were already under more pressure. That may be more of a challenge now because those markets have already been down quite a bit. But markets that had been holding up are feeling it, too.

Demographics and the land market

Maggie Lake: You recently had your annual housing summit. You wish there were better news, but it's a great time to have these conversations because you're talking to leaders across all these sectors.

What was the biggest concern you heard? What themes are you taking away as you move through the end of this year into next?

Ivy Zelman: We focused a lot on the troubling demographics we face as a nation, as all developed nations worldwide do.

We're seeing shrinking populations because birth rates are below replacement. Death rates are improving, but absolute deaths are rising. Immigration has pretty much been halted.

That means the number of incremental households being formed will decelerate and has been doing so. The combination means less need for housing supply in the future.

We believe we're not in a housing shortage. We believe we're in a fairly balanced market at roughly 1.4 million starts.

By 2030, more people in this country will die than are born. We will start to see a lot less need for housing supply as we enter the new decade. I don't know that the industry is equipped for that or thinking about it.

Probably the biggest theme was the need for the land market to reset. How do we drive affordability? Land prices have been sticky. Until recently, they had been decelerating, but not declining year over year.

Today, we published our land-development survey and saw a modest tick lower in finished-lot prices. I think land sellers and land bankers will have to capitulate, given the weakness in demand from builders who are now going to pull back on starts.

Our September survey showed a 7% year-over-year pullback in single-family starts.

The challenge for land sellers is that half their costs are hard costs. We can divide that half again: half would be regulatory and impact fees, and half would be development costs. Diesel doubling has put pressure on them.

There's not as much margin for them to give, but there is wiggle room. It's in the whole industry's best interest for land bankers and land sellers to work with builders and collaborate.

We know from prior downturns, like the global financial crisis, that land sitting mothballed or idle is not good. It's not wine, Maggie. It doesn't get better with age. We need to move through it.

Builders are, in some cases, walking away from option deposits. We're also seeing renegotiations of terms and starting to see renegotiations of price, which I think we have to see.

Who finances the land

Maggie Lake: Who are the land sellers as a class? Are they developers? Is this privately held, an investment class or individuals? Who are they, for people who aren't in the weeds of this industry?

Ivy Zelman: The industry has morphed more toward land banking rather than ranchers selling the family's land over the years. That still happens, and there are plenty of land developers.

Because public homebuilders, which account for more than 50% of the market, don't want to hold land on their balance sheets, private equity firms have supplied the capital to allow a land-light strategy. We estimate the land-banking industry in this market at roughly $35 billion.

Maggie Lake: That's interesting because we hear and talk a lot about holding real assets as part of a portfolio. Land is a big part of having a strategy around that.

Investor money that has made its way into private equity holding land is going to have a stake in this game. That's important.

Ivy Zelman: They're probably going to have to come to grips with returns being lower than they were promised. I think that's inevitable unless something changes. I don't know what would stop that from coming to fruition.

On the flip side, renter households are growing faster. Owner households are going down, and incremental renter households are accelerating.

When you look for green shoots in the ecosystem, homebuilder suppliers, landowners and everybody else are hurting. Even home improvement is hurting.

But in the rental market, we're starting to see green shoots as renter households strengthen. Supply has been heavy throughout the Southwest and Southeast, and prices have come down, so rent relative to income has become very affordable.

That's one positive little trinket for your viewers.

Young adults and household formation

Maggie Lake: That's important. Do we have a sense of whether this is due to market conditions or a different demographic mindset?

It's been so hard to find an affordable first home and start a family that some younger people ask, "Do I really need to own a home? Is that part of the American dream I see, given how much of my income it would take?"

They want other experiences, especially as a post-COVID generation. Is it market conditions, or could it be a mindset change?

Ivy Zelman: A combination of both.

A key input for understanding household growth is the number of young adults living at home and whether that has changed. In the 1980s and 1990s, when I left home, 15% of people ages 20 to 39 lived at home. Now we're hovering around 22%.

For every 100-basis-point increase in young adults living at home, that takes away half a million households.

During the initial part of COVID, when everyone wanted space and distance, that number came down closer to 20% in [years unclear in the captions] and early 2022. Then it reversed as soon as rates went up.

I don't expect it would ever go below 20% again because of the mindset.

Affordability is part of it, but so is, "I can't afford it. My parents' house is pretty nice." We make it really nice for them.

They'll stay longer, or move out and rent with a roommate. They might stay that way for a while and still not save enough to buy a home. They may end up renting a home rather than owning one.

Young women today, I've got two in their 20s, and one doesn't even want children. It breaks my heart. You hear young women who aren't interested in marriage and are pursuing higher education, or who might get married, have one child and be done. We hear more of that.

Mindset is part of it. They want more balance. My 24-year-old son said, "I don't want to be you, Mom. I don't want to work like you worked." It's like, "Thanks a lot."

Maggie Lake: Feel free to leave comments if you're having these conversations across generations.

I don't cast judgment on it. I'm not sure the other way was necessarily right. There may be a whole bunch of policies connected to this that would change the scenario.

It's interesting that you're focused on demographics. As investors, we're in this quarter-to-quarter, short-term environment, while these larger, complex issues will have a big impact on businesses. You're forward-leaning in thinking about that.

Ivy Zelman: Not just housing. Changing demographics will have implications for many sectors.

Young people think differently about homeownership. I don't think it's as much of a priority. The latest iPhone or technology is where they're putting excess dollars, and there aren't many excess dollars.

Think about inflation at the gas pump and elsewhere. People already have significant expenses and not much discretionary income left. It disheartens them.

You hear about online betting and young people going to Gamblers Anonymous because they're blowing up their lives looking for a quick fix. On social media, they see people getting rich.

You can't get rich that quickly buying a home, but other ways are available to them. Obviously, it's not working for everybody.

The outlook for rates and affordability

Maggie Lake: You're going to try what you can when wages haven't gone up and you can't find a job. It's a complex problem.

Are you anticipating an extended period of higher rates in your forecast? How does that change the outlook? We're used to a low-interest-rate environment. Are we moving into a different trend, do you think rates come down, or is it too early to say?

Ivy Zelman: We use the forward yield curve. We're not smart enough, Maggie, to forecast rates.

Personally, I think we're higher for longer. At Zelman, we use the Blue Chip Economic Indicators. There's an estimate we use that's priced into the forward yield curve, which is higher.

I don't have it off the top of my head, but it says we're here or slightly higher in [forecast years unclear in the captions] and the out-years. That's what we use in our modeling.

Affordability can improve in three ways: home prices come down, rates come down or incomes accelerate.

It could be a slow grind. Nationally, we're seeing wage growth exceeding home-price growth. That doesn't mean it's true locally in every market, or that everyone feels good about their job compared with what's happening to home prices.

Those are the three ingredients. More people haven't saved up money, so affordability is a real factor.

We could also see land prices reset, allowing builders a lower lot basis, but that's going to be slow.

We predict a very slow grind. I feel bad for my builder friends. This will be going into a sixth year, and we think it's likely lower rather than higher.

The housing industry feels like the redheaded stepchild, left for dead.

Everyone talks about the K-shaped economy, rich people and poor people. Now we have AI and everybody else. If you're not at the big seven, Meta or Anthropic, you're in industries under tremendous pressure. Housing is one of the worst.

One other thing I'd add to housing's woes, and I hate to pile on: in July or August, we started hearing concerns about labor constraints.

The good guys in housing had been input costs and building-material costs. Despite transportation-cost headwinds, suppliers weren't able to pass them along. With the industry weak, labor was plentiful.

Starting in late summer, we heard more about Immigration and Customs Enforcement raids and job sites being affected. Now labor and material costs are going the wrong way. I wanted to include that.

Builder scale and consolidation

Maggie Lake: That's important because it had been helpful. From what you're saying, there's no room to build those costs into higher prices.

Against that backdrop, did anyone at the summit find it interesting that Berkshire Hathaway has a big position in [company name unclear; captions read "LAR"], given all the trouble you've described?

Ivy Zelman: Berkshire has a reputation for being value-driven investors. There is value in [the same company] if you can take a much longer horizon.

Our price targets are typically 12-month targets, so different investors have different strategies.

Berkshire Hathaway has already made a big bet on housing. They own homebuilders, Clayton Homes and Benjamin Moore. There are a whole bunch of housing and housing-related companies they've acquired.

They've made a stake in this market and are adding to their position when nobody else wants it.

Maggie Lake: Usually, that's when value investors make the most money.

Ivy Zelman: Exactly.

Maggie Lake: Something to keep in mind with a longer time horizon. Does size matter when we look at these pressures? Would you expect mergers and acquisitions or consolidation in tough times? Does scale give a builder an advantage in offsetting these headwinds?

Ivy Zelman: We've written a lot about scale. There's no question there are significant advantages.

Starting with the cost of capital, public versus private can be anywhere from 500 to [upper figure unclear; captions read "a,000"] basis points more favorable.

You get purchasing synergies and better relationships with the trades. You can keep them busy. When things get tough, trades go where the work is. If they can't get consistency from one builder, they'll go to the next.

Private builders have already been under pressure because they compete with builders buying down rates aggressively and carrying stronger balance sheets.

We've seen a lot of consolidation in the last several years. The Japanese companies and Berkshire Hathaway combined now account for, let's say, 12% of overall new-home market share. We have three large Japanese companies and Berkshire.

Those companies are more likely to integrate what they've acquired. I don't know whether the other public builders will step up and buy until we see real distress. That could happen.

Housing and the risk of another financial crisis

Maggie Lake: As we're recording, it's the anniversary of a famous Black Monday. We keep getting comparisons with crises and people looking for the canary in the coal mine.

Could this be another global financial crisis? Are there seeds of a systemic crisis anywhere in housing? Or, because subprime hasn't been an issue, are we clear of that kind of crisis and looking at a painful down market?

Ivy Zelman: I'd lean toward the latter.

Despite the pressure, the mortgage market is in a solid position since Dodd-Frank put in what I'd call the guardrails in 2014. You have to have a qualified mortgage. I don't think we have a lot of problems there.

On the other hand, there are other risks. We're watching what's happening more broadly with our $40 trillion of debt and the long end of the curve. Those things are beyond the builder's control.

How does something break that we're not contemplating? That risk is there. But looking at it now, we don't think this would be a global financial crisis.

Public builders have done a great job mitigating risk by going land-light and having balance sheets with much less debt and leverage. We're not looking for a global financial crisis right now.

Technology and construction

Maggie Lake: If things break, it seems the root cause would come from somewhere else.

What are innovative companies doing to navigate this environment and find growth? You mentioned synergies and larger players operating with a stronger hand. What about AI? Is anyone doing something innovative?

Sometimes companies come out strong after tough times because they found opportunities.

Ivy Zelman: Companies have been investing in AI, probably through smaller startups and opportunities to bring in robotics or supply-chain improvements. Nothing significant enough to move the needle right now.

I think D.R. Horton announced last week, when I was in New York, that it would pilot a program with a Toronto-based Canadian company to have robotics drive the framing of homes.

It's a partnership they're testing. It's more onesies and twosies. That was one of the bigger things we've heard, but nothing significant yet. They're certainly trying.

Our industry is more archaic. Trades do things one way. I heard a story about a steel-framed house. Everyone was excited until the next trades came in and didn't know how to deal with the steel frames.

It's a huge puzzle with many pieces. Builders are general contractors trying to make those pieces fit together. It's going to take a lot of time.

Maggie Lake: It's a complex supply chain even on the labor front. That's why shortages matter. You're losing institutional knowledge. You can't necessarily bring somebody in to fill that void easily.

Ivy Zelman: Absolutely.

Older buyers and wealth transfers

Maggie Lake: We haven't had much of that. I want to end on demographics.

In other sectors, we've heard the phrase "silver tsunami." So much wealth and activity is tied to aging boomers, perhaps eventually people younger than that, and industries catering to them.

Is that happening in housing? Are builders looking more toward that demographic for growth, given the difficulty elsewhere?

Ivy Zelman: [Company name unclear; captions read "PY"] has introduced a product called Explore.

It's providing what would eventually be someone's second home. Someone in their 40s, with children still in school, buys a home with those amenities as a second home, but eventually wants to retire there. They've had success with it.

We've heard so much about the wealth transfer, whether it's $100 trillion or other huge numbers. What we recognize, and what a lot of studies show, is that most of the wealth is being transferred to people who are already wealthy.

It doesn't really help the have-nots.

Data from Fannie Mae, Freddie Mac and the Federal Housing Administration suggest down-payment assistance or gifting hasn't changed much. Call it the 15% to 20% range, which surprised us.

But outright cash purchases by the youngest cohort have spiked a few hundred basis points. People are transferring wealth while they're alive, or grandparents are transferring it.

It's not going to provide the benefit people might assume or hope for. I don't know whether that answers the question.

Maggie Lake: It does. If the whole industry is in a downturn, I'm not sure building a retirement home, a rancher with a bedroom or an in-law suite at scale is going to matter enough to pull anyone out of the doldrums.

Ivy, it's wonderful to catch up with you. Thank you.

Ivy Zelman: I'm sorry. I wish I had better news. Let's hope we see brighter lights after the midterms.

Maggie Lake: At least information is power. It's better to be armed with what's coming than living in a fantasy. We appreciate the reality check.

Ivy Zelman: Thank you so much.

Maggie Lake: Thanks so much.

Trey Reik joins Maggie Lake

Maggie Lake: Hey Trey, thanks for jumping on.

Trey Reik: Maggie, thanks for having me. It's always a pleasure. You guys are doing a great job at Wealthion.

Maggie Lake: We're trying to get information out because these are hard markets. We have contradictory signals coming through.

We spoke to Ivy Zelman, who was downbeat on housing. That stands in contrast to voices talking about high inflation, a resilient economy and running it hot.

What's your take on what's happening under the hood of the US economy?

Trey Reik: I've been doing this a long time. There are certain analysts, Dana Telsey in retail and MoffettNathanson in media, where, when I see them on Bloomberg, I stop what I'm doing because I want to hear what they have to say. I've watched their careers for decades.

Ivy is in that category. Over decades, she's established the experience and methods to maintain all of this. I wouldn't disagree with her in a second. If she says housing will be weak, I'm sure it's in for at least a few hurdles.

Skipping ahead, I know interest rates are a big part of this. I'm not as firmly in the higher-for-longer camp as a lot of people are. We can start there if you want.

Maggie Lake: I do. That's part of why I wanted you on. It's been the predominant theme.

The odds have come down, and maybe we think they're on hold. But there's still a thought that we're looking at hikes down the road. Inflation has been above the Fed's target too long, and they have to do something.

You've been skeptical all along that we're in a tightening cycle. Why?

Government debt and the rate outlook

Trey Reik: I have to avoid my half-hour answers, but it's the amount of outstanding debt.

Everybody knows these numbers. It's $41 trillion. The short-term interest rate to finance that Treasury debt is now $1.2 trillion annualized, and it's growing.

If you look at nondiscretionary federal expenses, entitlements, veterans' spending and interest expense, as Luke Gromen points out, that's already 105% of tax receipts. It doesn't include defense. It's growing at 7.5%, and tax receipts are growing at 4%.

In the gold trade, where I'd identify myself, we've studied the deficit for two decades and wondered where and when we hit an inflection point where it's unmanageable.

Gold's performance over the past two years demonstrates, I think, that we're in one of those periods when people are starting to worry about a feedback loop.

You mentioned the Fed and percentages. On September 28, the S&P purchasing managers' index numbers were very strong, the strongest in a decade. That's when the jailbreak in long rates started.

I think the 30-year got to [yield unclear; captions read "573"] on October 7, and the 10-year to [yield unclear; captions read "536"]. In Ivy's world, the 30-year mortgage rate reached 7.5%. That was a big move in a short time.

In the next 24 to 48 hours, the most important Fed members spoke in chorus about why an October rate hike wasn't necessary.

The big troika is Fed Chair Warsh, Vice Chair Jefferson and New York Fed President John Williams.

On the 29th, Williams said he saw no need for urgency. That's an amazing thing for the New York Fed president to say. Jefferson said, "We need more time."

Warsh has said we need to look past these inflationary factors to what's happening underneath. Even Michelle Bowman, who isn't in the troika but is vice chair for supervision, said, "I don't currently see an urgent need for more action."

When Williams, Jefferson, Bowman and Warsh say something in 48 hours, the Fed is sending a clear signal. That caused rates to fall back from those peaks quickly.

Why would they do that? The Fed has information about liquidity, Treasury-market liquidity, total debt and the negative national savings rate. I think they're concerned short rates can't go up much from this level.

Ivy is in the long-term-rate category, which is a different relationship. Some would say that if the Fed doesn't raise rates, long rates may go up faster because people are worried.

But in this environment, if we get that kind of event, Scott Bessent has already danced with yield curve control for two months. If the Fed needs to step in at the long end, it will do that, too.

Maggie Lake: Sequence matters. I hear you saying the debt handcuffs them a little.

We see pain and demand destruction. People care when housing prices go down or they can't buy a house. That's partly why affordability is so prevalent. They care about gas prices, but they care about their house prices, too.

With all this piling up, if the market's wrong about the Fed, do you see any rate hikes this year? Is there a chance we see none?

Trey Reik: It's like you're giving me a pass under the hoop for a layup. For six months, I've said expectations for Fed hikes are out of line.

Maggie Lake: I knew you thought they were out of line. I wasn't sure you thought none was possible.

Trey Reik: On the 28th, the odds of an October hike were 70.3%. Right now they're 9.4%.

December odds are in the 80s, say 81%. Add 81 and nine, and you get a 90% chance of a hike before the end of this year.

I'm still in the camp saying those percentages will fall all the way to December. It wouldn't surprise me if we didn't see another hike because of the debt load, financing costs and the negative national savings rate, which is extremely important.

There's a lot of stress. The AI buildout is sucking capital out of the system, making everything more vulnerable.

Let's not forget France is close to disintegrating in the past two weeks. Its yield spread to [comparison benchmark unclear; captions read "bonds"] is 177 basis points.

Over the weekend, although I see Bolsonaro may contest it, he lost in a shocking defeat to Lula. At one point, the stock market was down 25%, the real was down 11%, and a lot of stocks were down 50%.

This fiscal problem isn't just a US problem. It's global. We're hitting points where rates can't go up.

Gold and the market adjustment

Maggie Lake: Strain in sovereign markets is scary.

If there's mispricing, there's always opportunity for investors. Where do you see market adjustments coming?

I know you're watching gold because the rate environment has been one of the things keeping downward pressure on its price.

Trey Reik: I'm not qualified to talk about a lot of different parts of the market, and I've never been a bond guy.

I do think the likelihood of long rates increasing much from here is very slim for the reasons I've mentioned. If the Fed has to get involved, it knows how. It's done it before.

Gold gets a lot of criticism. It's earned a reputation in the past two months for underperforming.

But in 2024 it was up 27%, in 2025 it was up 65%, and in January it was up 25%. Year to date, it's down 6%.

We exited last year at $4,300. After 27% and 65%, if it were any other stock, commodity or asset, you'd say that's a reasonable correction. I don't read much into what's happened to gold's price.

The January blowoff was uncomfortable because everyone plots those fulcrum points on their charts, and 25% is a lot in a month.

I think gold is performing quite well. It's done much better than people might have expected during this 10- and 30-year Treasury-yield jailbreak.

From the March high, rather than the beginning of the year, gold is down 25%, but GDX is down only 29%.

For someone who's been around gold equities as long as I have, if you told me gold would fall 25%, I'd expect the stocks to do much worse than four percentage points lower.

Stocks may already be giving a signal because gold-equity investors tend to be longer-term than people trading gold.

I personally think $4,000 will prove a durable floor. Once people reduce expectations for a Fed hiking cycle, gold could have a pretty good spurt.

Maggie Lake: We're going to see it play out over the next couple of weeks. We have Fed meetings, earnings and a lot of data.

There's a lot to watch. Trey, you'll come back and help guide us through it. Appreciate it.

Trey Reik: Terrific. Thanks for having me. Let's tune in tomorrow at 2:30 for the press conference.

Sources

¹ Wealthion, Housing Weakness is spreading to luxury buyers | Ivy Zelman. Original conversations with Ivy Zelman and Trey Reik, hosted separately by Maggie Lake. ² Zelman, Ivy Zelman, official biography. Co-Founder and Executive Vice President. https://www.zelmanassociates.com/about/our-team/ivy-zelman ³ Freddie Mac, Primary Mortgage Market Survey archive. Weekly 30-year fixed-rate averages for October 15 and October 29, 2026. https://www.freddiemac.com/pmms/pmms_archives ⁴ Consumer Financial Protection Bureau, How should I use lender credits and points (also called discount points)?, reviewed October 19, 2023; Mortgage financing options in a higher interest rate environment, December 21, 2022, Temporary Buydowns. https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points-en-136/ https://www.consumerfinance.gov/archive/blog/mortgage-financing-options-in-a-higher-interest-rate-environment/ ⁵ US Census Bureau and Department of Housing and Urban Development, Monthly New Residential Sales, September 2026, released October 27, 2026. Seasonally adjusted inventory and months' supply. https://www.census.gov/construction/nrs/pdf/newressales_202609.pdf ⁶ Congressional Budget Office, The Demographic Outlook: 2026 to 2056, January 2026, At a Glance and Population Growth. Projections reflect laws and policies as of September 30, 2025. https://www.cbo.gov/publication/61994 ⁷ Consumer Financial Protection Bureau, What is the ability-to-repay rule? Qualified Mortgages are one compliance route, not a requirement for every covered loan. https://www.consumerfinance.gov/ask-cfpb/what-is-the-ability-to-repay-rule-en-1787/ ⁸ GoldSilver, About, Trey Reik official expert biography. https://goldsilver.com/about/ ⁹ Federal Reserve Board, Federal Reserve issues FOMC statement, October 28, 2026; Open Market Operations, description of the overnight federal funds rate. https://www.federalreserve.gov/newsevents/pressreleases/monetary20261028a.htm https://www.federalreserve.gov/monetarypolicy/openmarket.htm

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